Yes Bank - Q4FY13 Result Review - Angel Broking

During 4QFY2013, Yes Bank reported strong performance, with net profit growth of 33.2% yoy, which was in-line with our estimates. On the operating front, while pre-provisioning profit grew by 47.3% yoy, slightly above estimates, owing to higher than estimated growth in other income(42.4% yoy), the bank also made higher provisions (PCR up by 13 percentage points), which was higher than what we had estimated.

Business growth robust, NIMs stable qoq: During 4QFY2013, the bank registered a healthy growth in its business, as advances and deposits grew by 23.7% and 36.2% yoy, respectively. CASA deposits grew by 71.6% yoy, thereby taking its CASA ratio to 18.9% from 15.0% as of 4QFY2012. Savings deposits rose by 140.8% yoy to Rs. 6,023cr. The cost of funds for the bank dipped by 10bp sequentially to 8.4%, while, the yield on advances increased by 10bp sequentially to 12.4%. The NIMs stood at 3.0%, remained stable qoq. The bank's non-interest income grew strongly by 42.4% yoy to Rs. 379cr, largely on account of continued growth witnessed in customer flows and enhanced cross-selling of products. On the asset quality front, the bank witnessed an increase in the Gross NPA levels, which were higher by 23.7% sequentially on an absolute basis. However, as the bank stepped up its PCR from 79.6% to 92.6%, the Net NPA level ratio came down by 3bp to 0.01%.

Outlook and valuation: Yes Bank has taken challenges of building a retail deposit base head-on, nearly doubling its branch network over the past 18 months to 430 branches now and aggressively increasing savings rate to 7% as a smart customeracquisition strategy. It currently trades at valuations of 2.4x FY2014E ABV and 2.0x FY2015E ABV, which in our view, offers limited room for upside from current levels. Hence, we recommend Neutral rating on the stock.

Source : Equity Bulls

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